WTI Crude Oil Futures (March)

Yesterday’s Settlement: 75.44, down -0.39 [-0.51%]

WTI Crude Oil futures moved lower yesterday as markets continued to digest Trump tariff threats and incoming executive orders. Trump stated yesterday that he would consider strengthening tariffs aimed at Russia if an agreement to end the war is not reached – this is rhetoric we’ve yet to hear from him.

Trump has pushed for increased drilling and energy production in the United States. Our attitude towards this often talked about trade catalyst has been largely agnostic. Wells are drilled in accordance to IRR calculations and 5-10 year breakevens. These calculations and decisions are largely driven by the price of oil and interest rates – not the pushing of politicians that will likely flip to a polar opposite four years later. Wells in the Permian have also been dropping steadily as the efficiency of the region reaches its outer barrier. Any increased oil production that comes from these Trump orders will likely be offset by stricter sanctions on Iran, while any trade barriers with Canada would leave us at a net negative to where we are now in terms of oil supply. This “drill baby drill” narrative may drive markets in the short / medium term, so it is important to pay attention to, but our deterministic factors for trading bias will remain based upon supply & demand rather than narrative.

Today, futures are lower by +0.15 [+0.19%] to 75.59

Last night’s API report showed a large 1mil bbl build in crude oil. The API figures are shown below [thousand bbls]:

Crude Oil: +1,000
Gasoline: +3,200
Distillates: +1,900
Estimates for today’s EIA report are as follows [thousand bbls]:

Crude Oil: -400
Gasoline: 2,185
Distillates: 790
Refinery Utilization: -0.90%

The macro environment is trading risk-off this morning. Equities, bonds, and precious metals are lower while the Dollar is marginally stronger. The Yen is trading strong which is helping tamp down the Dollar strength.

Technical Analysis:

Futures settled below our pivot range of 75.75-76.16 yesterday, signaling a shift in momentum to the downside. Our next buy level with conviction remains at 74.18-74.49***.

With the settlement below our pivot and point of balance of 75.75-76.16, our new pivot point is set at 75.60. Intraday support should be seen at 75.02 while intraday resistance is apparent at 76.16.

Our bias remains neutral but is tilting towards neutral / bearish. Today’s price action will be telling for the momentum to come.

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